THE PRICE IS RIGHT: The Art and Science of Proving and Disproving Damages in Employment Cases

Transcription

1 THE PRICE IS RIGHT: The Art and Science of Proving and Disproving Damages in Employment Cases Statutes, without remedies, are meaningless. Put simply, plaintiff=s lawyers accept employment law cases to recover damages. Further, monetary penalties are the most effective way of deterring employers or unions from committing civil rights violations. Since the 1991 amendments to the Civil Rights Act, the remedies available have encouraged attorneys to handle civil rights litigation on a large scale basis and to profit from it. Further, recent case law has allowed plaintiff=s attorneys to reach high to escalate the amounts of damages available for recovery. available: Before the Civil Rights Act of 1964 was amended in 1991, the following remedies were 1. Back pay; 2. Reinstatement, promotion or hiring; 3. Front pay, under limited circumstances; 4. Fringe benefits and other forms of compensation; 5. Injunctive relief; 6. Other equitable relief, and; 7. Attorney=s fees. With the adoption of the Civil Rights Act of 1991, Congress significantly expanded relief available to plaintiffs allowing for the first time the provision of compensatory and punitive damages.

2 42 U.S.C. '1981a(b) provides that a complaining party may recover punitive damages against an employer if the complaining party demonstrates that the respondent engaged in a discriminatory practice or discriminatory practices with malice or with a reckless indifference to the federally protected rights of an aggrieved individual. Further, the section provides for the recovery of compensatory damages for such items as emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other non-pecuniary losses. 1 With large amounts of damages available, plaintiff=s lawyers have found civil rights litigation to be a profitable area with the possibility of large compensatory and punitive damage awards. Additionally, defense attorneys now see civil rights litigation as a real threat rather than as a primarily toothless statute as was the case prior to the 1991 amendments. Because the nature of the remedies have changed this area of law, this paper and discussion will primarily focus on several issues: 1) the damages available under federal statutes; 2) the availability and standards for imposition of compensatory and punitive damages; and 3) the appropriate evaluation of a case for potential damages. 1 The Civil Rights Act imposes damage caps on compensatory and punitive damages for claims under the Civil Rights Act of 1964 and the Americans with Disabilities Act of U.S.C. ' 1981a(a)(1) and (2). The caps are as follow: Number of Employees Recovery Limit 14 to 100 $ 50, to 200 $ 100, to 500 $ 200, plus $ 300,000.00

3 I. Federal Court Damages A. Federal Claims Under federal law, compensatory damages are recoverable. Compensatory damages under federal law include: AFuture pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other non-pecuniary 42 U.S.C. ' 1981a(b)(3). Note that compensatory damages do not include interest on back pay or other relief authorized under '706(g) of the Civil Rights Act of 1964, 42 U.S.C. ' 2000e-5(g). Do not ignore items that could be compensable when determining the value of a case. For example, moving expenses, job search expenses, travel expenses related to subsequent employment all could constitute future pecuniary losses. Additionally, the EEOC policy guide on compensatory damages provides further details as to the kinds of damages which are recoverable. (See attached Appendix 1, EEOC Policy Guide on Punitive Damages under 1991 Civil Rights Act.) 1. Pecuniary Losses Pecuniary losses include moving expenses, job search expenses, medical expenses, psychiatric expenses, physical therapy expenses, and other quantifiable out of pocket expenses that are incurred as a result of discriminatory conduct. Additionally, it is noteworthy that future pecuniary losses are subject to the caps even though past pecuniary losses are not. 2. Non-Pecuniary Losses The Policy Guide establishes that plaintiffs may seek and obtain compensation for nonpecuniary losses which include harm such as emotional pain, suffering, inconvenience, mental anguish, and loss of enjoyment of life. Other non-pecuniary losses could include injury to

4 professional standing, injury to character and reputation, injury to credit standing, loss of health, and any other non-pecuniary loss incurred as a result of the discriminatory conduct. Emotional harm may manifest itself as sleeplessness, anxiety, stress, depression, marital strain, humiliation, emotional distress, fatigue, or nervous breakdown. Additionally, plaintiffs are entitled to reimbursement of physical manifestations for emotional harm which could consist of ulcers, gastrointestinal distress, hair loss, headaches, or other physical symptoms directly attributable to discriminatory conduct. II. The Iron Fist: Punishing Employers Or Unions With Punitive Damages Punitive damages are available against the defendant if the plaintiff demonstrates that the defendant engaged in a discriminatory practice with malice and reckless indifference to the federally protected rights of the aggrieved individual. 42 U.S.C. ' 1981a(a). The EEOC Policy Guide on punitive damages identifies the following factors in considering the appropriateness of a punitive damage award: 1. The severity of the misconduct; 2. The amount needed to prevent repetition in light of the defendant=s financial condition or to deter others from similar discriminatory conduct in the future; 3. The nature, extent, and severity of the harm caused by the misconduct; 4. The existence and frequency of post discriminatory conduct; 5. Whether the employer has lied or attempted to conceal discriminatory conduct; 6. Whether the employer has made threats or engaged in retaliatory conduct. See EEOC Policy Guide on Compensatory and Punitive Damages attached as Appendix 1; Patterson v. P.H.P. Healthcare Corp., 90 F.3d 927, 944 (5th Cir. 1996). Juries cannot infer the presence of these factors and award punitive damages. Even if the jury does make such an

5 inference, the Court of Appeal will scrutinize the record to insure that evidence related to the factors are presented through competent evidence. If competent evidence is not available for some or even most of these factors, a punitive damage award may not be affirmed. There will often be major disputes as to whether punitive damage awards are appropriate where no actual damage or compensatory damages exist. In Kolstad v. American Dental Association, 119 S.Ct (1999), the United States Supreme Court affirmed the availability of punitive damages as a viable remedy in civil rights litigation. Specifically, in that case the court considered whether the employer=s conduct needed to be independently Aegregious@ to satisfy ' 1981a=s requirements for a punitive damage award. The court rejected this requirement indicating that although evidence of egregious behavior may provide a valuable means by which an employee can show the Amalice@ or Areckless indifference@ needed to qualify for such an award, it was not independently required. The Supreme Court noted that the terms Amalice@ and Areckless indifference@ focus on the actor=s state of mind, but '1981a does not require a showing of egregious or outrageous discrimination independent of the employer=s state of mind. However, the court went on to note that the petitioner must impute liability for punitive damages to the employer and that the employer may not be vicariously liable for the discriminatory employment decisions of managerial agents where the decisions are contrary to the employer=s good faith efforts to comply with Title VII. Therefore, while it is unnecessary for plaintiffs to demonstrate egregiousness of the conduct of the employer or union, it is necessary for plaintiffs to tie the conduct of the individual employees to the employer or union either through the actions of the employer or union directly or the inactions of the employer or union. Once the liability of punitive damages exists, it is for the plaintiff=s counsel

6 to convince juries of the necessity of these awards and for defense counsel to convince a jury that it is unnecessary to punish or deter the conduct in the future. III. Evaluate Potential Damage Awards. The evaluation of damages in a case should begin early, before a case is accepted by plaintiff=s counsel or as soon as notice of a claim exists for defendants. Screening plaintiff attorneys often make the mistake of accepting a case which may have good liability facts but results in a small award of damages. Defense attorneys sometimes underestimate the risk of exposure to their clients. To the extent that damage forms can be utilized the same way you would utilize regular intake questionnaires to determine potential damages, they should be used as a tool for measuring damages. A. Back Pay Determine the plaintiff=s salary at the time of the unlawful removal. Calculate the difference in salary earned and the salary lost up until the date of judgment. Remember to deduct other collateral benefits including unemployment compensation, VA benefits, and severance pay. Of course, interim earnings are always deducted. Consider whether the plaintiff has properly mitigated damages. But remember that the duty to mitigate is an affirmative defense and is waived if not pled. Remember also that the duty to mitigate mandates only that the employee accept comparable employment. Be prepared as a defendant to address this major issue in discovery. As plaintiff s counsel, invest in a notebook which you provide to each client in order to record in one place their mitigation efforts. Sometimes a failure to mitigate can exist only because the plaintiff has difficulty recalling the job search effort. Finally, counsel must consider whether after acquired evidence could result in a reduction of damages. McKennin v. National

7 Banner Publishing Company, 115 S.Ct. 879 (1994). To qualify under the doctrine, employers must show 1) it did not know of the employee=s misconduct prior to the allegedly actionable employment decision; 2) the misconduct was severe; 3) it would have made the same adverse employment decision based upon the severe misconduct. The imposition of the after acquired evidence doctrine does not necessarily bar liability. It limits back pay by cutting off liability as the date of discovery and barring from paying reinstatement. Do not to forget to include calculations for vacation benefits, medical benefits, bonuses, commissions, and any other benefits of employment. Calculate the value of these benefits which were lost as compared to the value of benefits under new employment. B. Front Pay In calculating front pay consider the plaintiff=s salary at the time of the unlawful act and calculate the difference to some future point where loss of earnings cease or until normal retirement age. Remember that the plaintiff may be entitled to greater damages if they can establish the plaintiff s inability to obtain gainful employment for any reason, particularly because of injuries resulting from the employer=s unlawful acts. Of course, front pay damages are an alternative for reinstatement. In some cases, reinstatement may be the preferred remedy for either the plaintiff or defendant. This is the area, where damages have escalated. Specifically, front pay damages, which are outside of the cap of damages imposed by Section 1981a(b), are an area ripe for development by plaintiff=s lawyers. In Pollard v. E. I. du Pont de Nemours & Company, 121 S.Ct (2001), Sharon Pollard sued her former employer Du Pont alleging she was subjected to a hostile work environment based upon her sex in violation of Title VII of the Civil Rights Act of The district court found Pollard was subjected to sexual harassment. The court ordered Pollard

8 significant damages including $107, in back pay and benefits, $252, in attorney=s fees and $300, in compensatory damages, the maximum permitted under the statutory cap under Section The court noted that the $300, award was insufficient to compensate the plaintiff for her front pay losses but upheld the figure because the Circuit Court authority included front pay in the cap. The Supreme Court reversed. It recognized that front pay could be considered compensation for Afuture pecuniary in which case it would be subject to the statutory cap. While the term future pecuniary losses is not found in the statute, its ordinary meaning could include all payments for monetary losses after the date of judgment. However, the Supreme Court rejected reading this term of ' 1981a in isolation. Reading the provision as a whole, the court found that the better interpretation determined that front pay is not within the meaning of compensatory damages and is excluded from the statutory cap. The Supreme Court noted that Congress intended to grant an entitlement to additional remedies in its enactment of the Civil Rights Act of Congress expressly stated that these additional remedies under federal law were necessary to deter unlawful harassment and discrimination in the work place. The plain language of the statute provides that the new remedies authorized were Ain addition to@ the relief authorized by ' 706(g). ' 1981a provides that Athe complaining party may recover compensatory and punitive damages as allowed in subsection (b) of [' 1981a], in addition to any relief authorized by ' 706(g) of the Civil Rights Act of 1964, from the respondent.@ Further, ' 1981a(b)(2) states that: A[c]ompensatory damages awarded under [' 1981a] shall not include back pay, interest on back pay, or any other type of relief authorized under ' 706(g) of the Civil Rights Act of 1964.@ Therefore, the Supreme Court held that, if front pay was a remedy available and authorized under ' 706a(g), it is excluded from

9 the meaning of compensatory damages under '1981a. The Supreme Court held that ' 706(g) authorized front pay awards in lieu of reinstatement. Since front pay remedies are authorized under ' 706(g), the Supreme Court held that Congress did not limit the availability of these awards in ' 1981a. Instead, the court held that Congress sought to expand the remedies available by permitting the recovery of compensatory and punitive damages in addition to previously available remedies such as front pay. The Supreme Court=s holding, excluding front pay from statutory caps, increases the possibility for damages awarded to potential plaintiffs in claims under Title VII of the Civil Rights Act. With this in mind, seeking large awards of front pay is an area open for plaintiff=s counsel development. Of course, this will require and often necessitate the use of expert witnesses by plaintiffs and defendants in this type of litigation. For example, the use of vocational rehabilitation experts in an effort to demonstrate the lack of available comparable jobs or indeed existence of comparable jobs in the work place to demonstrate whether the plaintiff could or could not reach make whole relief throughout the remainder of their career is more common. C. Compensatory Damages Obviously, compensatory damages have rendered employment litigation profitable. However, lawyers often spend too little time on this issue. Plaintiff=s lawyers should remember to consider all items which are compensable. Additionally, some state discrimination laws have identical compensatory damages but higher or no statutory cap. Defense attorneys can too often pay too little attention to this area in its desire not to acknowledge liability. Once compensatory damages are alleged, the decision must be weighed as to whether to hire an expert witness. Part of the requirement here is that lawyers must become familiar with the Diagnostic and Statistical Manual-IV (DSMIV). In order to discuss with the jury the

10 emotional distress injuries during trial, counsel must become familiar with issues related to psychiatric conditions. Further, this knowledge will greatly assist the parties in examination of expert witnesses as well as in communicating with experts in preparation for trial. There are some cases where focusing significant effort on emotional injuries and psychiatric injuries is not warranted. In some cases, plaintiffs are not significantly bothered by the discrimination and/or harassment and deal with it. It may be difficult in those cases to prove significant emotional distress. From the outset, attorneys must evaluate whether the focus of the case is a severe emotional injury and to perform an analysis to determine if the issue should be placed in dispute. Obviously, from the plaintiff s perspective, there are several risks associated with raising a claim for emotional distress. They include: 1. Plaintiff=s psychological history will be at issue in the case; 2. Evidence of plaintiff=s past misconduct, not otherwise admissible, may be admissible or at least become subject to admissibility; 3. The jury could see the claim as exaggerated; 4. The testimony regarding your client=s emotional response might be interpreted as histrionic. Nevertheless, if you place the emotional distress of your client as issue, you should expect and respond favorably to a request for an independent medical evaluations. Further, plaintiffs should consider the retention of an expert witness even if the client is currently being seen by a treating physician. Keep in mind that a treating physician may not be qualified to provide expert testimony in court. Further, the client=s treating physician may be closely involved and personally involved with the plaintiff and may not be able to afford the type of independent objective evaluation necessary in this case. Where the emotional state of the plaintiff is put into evidence, counsel should strongly consider the retention of an expert witness.

11 If you determine that you will use a treating physician as your expert witness in a case, extend the courtesy of meeting with the treating physician before their deposition. Although you will certainly be asked to pay for the privilege, it reminds the treating physician that they are on your side. Further, it allows you time to raise specific issues to the treating physician and remind him of information which may be present in his own charts. Do not assume that the treating physician will have read the chart prior to the deposition. In fact, absent a meeting with you where you review the chart with the physician, it is more likely that he has not reviewed the chart before the deposition. Most often, the cost of this meeting will be well spent in terms of favorable testimony in the deposition. Of course, as counsel for the defendant, the retention of an expert witness is almost always necessary. This is especially true if the plaintiff either retains an expert or plans to use a treating physician at trial. Careful selection of the medical expert is vital. Chose one who will provide realistic assessment and have jury appeal. If possible, use the expert as a resource for communicating with the jury about this aspect of the case in voir dire, opening statement, cross examination of plaintiff, and closing arguments. D. Punitive Damages Again, punitive damages are available against defendants where plaintiffs demonstrate that the defendant engaged in a discriminatory practice with malice and reckless indifference to the federally protected rights of an aggrieved individual. Specific evidence must be shown in order to justify the award of punitive damages. E. Setting a Threshold Some plaintiff s attorneys think it is appropriate to set a threshold for whether to accept a case. You should consider the amount of attorney=s hours which will be involved in pursuing the

12 case before accepting it. It is not unusual to expend large numbers of hours taking this type of case to trial and appeal. You can certainly expect that appeal is a foregone conclusion in these cases in light of the rapidly developing law in the area and the conservative nature of the Fifth Circuit. Further, you can expect that the court will consider requests for reductions in your attorney=s fee applications. Finally, you should not anticipate that settlement is a likely option since, in many cases, defendants are adamant in their refusal to settle discrimination cases. Additionally, even if the cases are resolved, it is often the case that they are resolved only after a denial of summary judgment at the eve of trial. For this reason, the establishment of a threshold as to the value of the case can sometimes be useful in terms of determining whether to accept the case. IV. Conclusion Since 1991, plaintiff s lawyers have had real avenues for damage recoveries under the Civil Rights laws. This allows plaintiff s counsel to accept cases which correct workplace inequities and still earn a living. Plaintiff s lawyers should utilize effective screening procedures, expert testimony, and damage analysis in order to accept cases which maximize recovery on the part of our clients. Selected Union Cases I. CASES A. Plaintiff prevailed against UNION for district court entered judgment in favor of Plaintiff for $1, in actual damages and $30, in punitive damages Akins v. United Steelworkers Of Am., AFL-CIO, CLC, Local 187, 2009-NMCA-051, 146 N.M. 237, 208 P.3d

13 457 cert. granted, 2009-NMCERT-005, 146 N.M. 728, 214 P.3d 793 and aff'd sub nom. Akins v. United Steel Workers of Am., AFL-CIO, CLC, Local 187, 2010-NMSC-031, 237 P.3d 744. Background: City employee brought breach of the duty of fair representation (DFR), prima facie tort and intentional infliction of emotional distress action against the union. After granting the union summary judgment on the intentional infliction of emotional distress and prima facie tort claims, the District Court of Eddy County, Gary L. Clingman, D.J., entered judgment on a jury verdict on the DFR claim. Union appealed, and city employee crossappealed. Holdings: The Court of Appeals, Kennedy, J., held that: 1) punitive damages could be recovered from a union in a breach of the duty of fair representation (DFR) claim brought under state common law; 2) issue of whether employee was entitled to punitive damages, due to the union's outrageous conduct and overt racial discrimination was for the jury; and 3) punitive damages award of $30,000 was not excessive. B. The jury found for Plaintiff on some but not all of her claims, awarding her a total of $1,205,000 in compensatory damages and $1,027,501 in punitive damages. Dixon v. Int'l Broth. of Police Officers, 504 F.3d 73, 77 (1st Cir. 2007). Background: Female police officer brought action against union and two police officers involved in an alleged incident of verbal abuse, asserting claims of discrimination, retaliation, and defamation. After a jury trial, the United States District Court for the District of Massachusetts, William G. Young, J., entered judgment in favor of plaintiff on some but not all of her claims. Both parties appealed. Holdings: The Court of Appeals, Lynch, Circuit Judge, held that:

14 1) evidence was sufficient to establish a retaliation claim against male police officer; 2) comments made by union's national president could support officer's retaliation claim; 3) evidence was sufficient to find union local liable for discriminatory actions; 4) jury instructions were not plain error; and 5) female officer was required to prove actual malice in defamation claim. Julie Richard-Spencer Robein, Urann, Spencer, Picard & Cangemi, APLC 2540 Severn Avenue, Suite 400 (70002) Post Office Box 6768 Metairie, LA Telephone: (504) Facsimile: (504) jrichard@ruspclaw.com